With Reddit's interest in sending some stocks soaring showing no sign of slowing down, the trading app Robinhood started restricting some transactions Thursday morning.
Reddit wasn't happy — and neither are some lawmakers. The incident apparently struck an unusual bipartisan chord, with Texas Republican Ted Cruz throwing his weight behind progressive Democrats who called out the company.
In a blog post Thursday morning, Robinhood said that it would restrict some transactions "in light of recent volatility" including $AAL, $AMC, $BB, $BBBY, $CTRM, $EXPR, $GME, $KOSS, $NAKD, $NOK, $SNDL, $TR and $TRVG. Robinhood will still allow anyone invested in those stocks to close their positions, but the move prevents retail investors from throwing their weight behind new stocks en masse.
Rep. Rashida Tlaib called Robinhood's decision "beyond absurd" and suggested that the House Financial Services Committee hold a hearing on what she deemed "market manipulation" from the personal finance startup.
"They're blocking the ability to trade to protect Wall St. hedge funds, stealing millions of dollars from their users to protect people who've used the stock market as a casino for decades," Tlaib said.
Her colleague Rep. Alexandria Ocasio-Cortez — a member of that committee — chimed in with support for a hearing on Robinhood, calling the situation an "unacceptable" step to prevent retail investors from trading.
Seeing Cruz and Ocasio-Cortez line up on anything right now is unusual, to put it mildly. Earlier this month, Cruz called his enemy in the House a liar for demanding his resignation after it came to light that the Texas Republican fundraised on false claims that the election was stolen as the attack on the Capitol took place.
Update: Ocasio-Cortez rebuffed the bipartisan gesture from Cruz, but with Democrats in control that likely won't have much impact on the likelihood of hearings.
In the Senate, incoming Senate Banking, Housing, & Urban Affairs Chairman Sen. Sherrod Brown announced plans to hold a hearing "on the current state of the stock market."
People on Wall Street only care about the rules when they're the ones getting hurt.
It's time for SEC and Congress to make the economy work for everyone.
— Sherrod Brown (@SenSherrodBrown) January 28, 2021
Silicon Valley Rep. Ro Khanna also flagged Robinhood's decision to stop some trades, slamming the startup for freezing out small investors while powerful hedge funds scramble to get control of the situation.
"We’re done letting hedge fund billionaires treat the stock market like their personal playground, then taking their ball home as soon as they lose," Khanna said Thursday in a call for more regulation, citing the intensifying wealth disparity in the country.
" … This entire episode has demonstrated the power of technology to democratize access to American financial institutions, ultimately giving far more people a say in our economic structures," Khanna said.